Finally, the stock market is backing off from its overly-bought levels. E.g., the DJIA has backed off from its nearby high last Monday of 11,149 to its present 10,436. That is a modest and needed correction of only (-6.4%). Obviously, there will be more to come.

How have bonds fared by comparison? Depending on which benchmark you use, bonds continue to gain in price, though quite modestly. E.g., from last Monday’s close of 104.38, for a broad index such as AGG, to today’s 105.09 is a modest gain of a mere 68 basis points. But let me ask you this. Would you rather have enjoyed a -6.4% loss to your portfolio, or a 0.68% gain?

Now here is the bad news. The past week’s loses for stocks still haven’t created any bargains. The past week’s gains for bonds continue to take them away. But those who did their bond buying when it should have been done, at the prices it should have been done, as a Ben Graham-style value-investor should have, are now enjoying very fat gains that often exceed 100%. Let me repeat that, so there will be no misunderstanding: Bond gains that, often enough, have exceeded 100% from their entry-price to their present asking-price.

That’s not too shabby for a boring, backwater like bonds and for those who know how to use the asset class effectively, not that I have anyone in particular in mind. :-) :-) :-)

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